What changed in this filing

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Item 9A. Controls and Procedures

2026-04-03 compared with 2025-03-13 · 561 added, 514 removed, 876 unchanged (55% of the section changed)

CONTROLS AND PROCEDURES (CONTINUED)

Management ’ s Annual Report on Internal Control over Financial Reporting (Continued)

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 28, 2024, based on the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (the “2013 framework”).

Based on that assessment, management concluded that, as of December 28, 2024, the Company’s internal control over financial reporting was effective based on the criteria established in the 2013 framework.

The Company’s independent registered public accounting firm, Withum Smith+Brown, PC, has issued an attestation report on the effectiveness of the Company’s internal control over financial reporting as of December 28, 2024.

This report follows.

Planned Material Weakness Remediation Activities

To address these material weaknesses, management, with oversight from the Audit Committee.

have commenced actions to enhance the Company's control framework and policies, maintain evidence of control procedure operation, and improve our control environment.

Our planned remediation efforts related to the above-identified material weaknesses include, but are not limited to:

Reevaluate the overall control environment using a risk-based approach by performing a comprehensive assessment of financial reporting risks, reassessing the design and adequacy of existing controls and monitoring activities, and implementing enhancements to ensure controls are appropriately aligned with identified risks and operate effectively across the organization.

Strengthen management review controls by integrating standardized documentation requirements into the review process to ensure analyses, thresholds, conclusions, and follow-up actions are clearly supported.

Improve quarter-close controls by reevaluating the design, timing, and documentation requirements and implementing a structured close calendar with clear deadlines, ownership, and escalation protocols.

Implement targeted training for personnel involved in financial reporting and internal control activities to strengthen understanding of the Company's internal control over financial reporting framework, including Sarbanes-Oxley requirements and expectations for the design, execution, documentation, precision of review, and timeliness required to support the effective operation of management review controls and other key financial reporting controls.

Update its production application suite to phase out legacy timekeeping systems, implement a software development tool and update procedures to enhance change management documentation, and centralize provisioning and deprovisioning for remaining timekeeping systems via an IT ticketing system.

We will continue to assess the effectiveness of our internal control over financial reporting and take steps to remediate the known material weaknesses expeditiously.

These actions are subject to ongoing senior management review as well as Audit Committee oversight.

The implementation of these remediation efforts is in progress, may require additional expenditures to implement, and will require validation and testing of the design and operating effectiveness of internal controls over a sustained period of financial reporting cycles.

As a result, the timing of when we will be able to remediate the material weaknesses fully is uncertain.

We may also conclude that additional measures may be required to remediate the material weakness in our internal control over financial reporting, which may necessitate further implementation and evaluation time.

Changes in Internal Control Over Financial Reporting

Other than the identification of the material weaknesses and remediation efforts described above, there have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the quarter ended January 3, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

OTHER INFORMATION

(a) Form 8 -K Disclosure

On March 12, 2025, the Company and Mr.

Vizi entered into an amendment and restatement of his Executive Severance Agreement dated June 1, 2018, which was filed as an exhibit to the Company’s Current Report on Form 8 -K dated June 7, 2018 ( the "Severance Agreement").

The amended and restated agreement modified:

the amount that Mr.

Vizi would receive if either (a) he is involuntarily terminated by the Company for any reason other than "Cause" (as defined in the Severance Agreement), "Disability" (as defined in the Severance Agreement) or death, or (b) he resigns for "Good Reason" (as defined in the Severance Agreement), and, in each case, the termination is not a "Termination Related to a Change in Control" (as defined in the Severance Agreement).

Vizi will receive, among other amounts, the following severance payments in such event (the changes made by the amendment and restatement are noted):

an amount equal to 2.0 times (modified by the amendment and restatement from 1.5 times) the sum of (a) Mr.

Vizi's annual base salary as in effect immediately prior to the termination date (before taking into account any reduction that constitutes Good Reason) ("Annual Base Salary") and (b) highest annual bonus paid to Mr.

Vizi in any of the five fiscal years immediately preceding Mr.

Vizi's termination date or the amount that would be granted to him for the subsequent year, at target (modified by the amendment and restatement to increase the measurement period from three to five years and to add the subsequent year at target), which for all purposes under the Severance Agreement shall be deemed to include the grant date fair value of any restricted stock units granted subject to time-based or performance-based vesting (modified by the amendment and restatement to add performance-based equity, rather than only time-based) only to time-based vesting ("Bonus"), to be paid in installments over the twelve -month period following Mr.

Vizi's termination date;

the multiplier applicable to the amount that Mr.

Vizi would receive, if a Change in Control occurs and he experiences a qualifying termination, from 2.0 times, as set forth in the original Severance Agreement, to 2.99 times, with the definition of Bonus for the purpose of such calculation modified as described above.

The foregoing description of the amendment and restatement to the Severance Agreement is qualified in its entirety by the full text of the Amended and Restated Executive Severance Agreement, a copy of which is filed herewith as Exhibit 10 (m).

OTHER INFORMATION (CONTINUED)

(b) Rule 10b5 - 1 Trading Plans

As disclosed in the table below, during the three months ended December 28, 2024, certain of the Company’s directors and officers (as defined in Rule 16a - 1 (f) under the Exchange Act) adopted a “Rule 10b5 - 1 trading arrangement” (as defined in Item 408 (a) of Regulation S-K):

Adoption Date

Expiration Date

Common Stock to

be Purchased/Sold

December 7, 2023

March 7, 2026

President, Health

Care Services

December 5, 2023

December 1, 2024

January 1, 2025

December 31, 2026

___________________

( 1 ) The aggregate number of shares that can be sold under the plan is allocated into a series of tranches that would be sold at laddered prices as outlined in the plan.

Other than as disclosed above, no other officer or director of the Company adopted, terminated, or modified a “Rule 10b5 - 1 trading arrangement” or a “non-Rule 10b5 - 1 trading arrangement” (as defined in Item 408 (a) of Regulation S-K).

Form 8 -K Disclosure

Rule 10b5 - 1 Trading Plans

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

5 unchanged sentences

The information required by Item 11 shall be included in the 2026 Proxy Statement and is incorporated herein by reference.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

AND RELATED STOCKHOLDER MATTERS

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Except as set forth below, the information required by Item 12 shall be included in the 2026 Proxy Statement and is incorporated herein by reference.

The table below presents certain information as of December 28, 2024 concerning securities issuable in connection with equity compensation plans that have been approved by the Company’s shareholders and that have not been approved by the Company’s shareholders.

The table below presents certain information as of January 3, 2026 concerning securities issuable in connection with equity compensation plans that have been approved by the Company’s shareholders and that have not been approved by the Company’s shareholders.

Plan category

13 unchanged sentences

reflected in column (a)

Equity compensation plans

approved by security

Equity compensation plans

not approved by

security holders

____________________

(1) Includes time-based restricted stock awards of 289,421 and performance-based restricted stock awards of 300,000, none of which have an exercise price.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR

Equity compensation plans approved by security holders

Equity compensation plans not approved by security holders

Includes time-based restricted stock and stock unit awards of 179,037 and performance-based restricted stock and stock unit awards of 282,157, none of which have an exercise price.

Includes 248,902 shares from 2014 Omnibus Equity Compensation Plan and 1,000,000 shares from the 2025 Omnibus Equity Compensation Plan.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by Item 13 shall be included in the 2026 Proxy Statement and is incorporated herein by reference.

4 unchanged sentences

See Item (b) below.

The following exhibits are filed as part of, or incorporated by reference into, this report (unless otherwise

indicated, the file number with respect to each filed document is 1-10245):

The following exhibits are filed as part of, or incorporated by reference into, this report (unless otherwise indicated, the file number with respect to each filed document is 1-10245):

Asset Purchase Agreement, dated as of October 7, 2022, by and among RCM Technologies (USA), Inc., TalentHerder LLC and Christopher G.

51 unchanged sentences

Amended and Restated Executive Severance Agreement, dated as of March 12, 2025, by and between the Company and Bradley S.

(Filed herewith)

incorporated by reference to Exhibit 10(m) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 28, 2024, filed with the Securities and Exchange Commission on March 13, 2025.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (CONTINUED)

2 unchanged sentences

incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 5, 2024.

Policy Statement -- Insider Trading (Filed herewith)

RCM Technologies, Inc.

2025 Omnibus Equity Compensation Plan;

incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 22, 2025.

Policy Statement -- Insider Trading;

incorporated by reference to Exhibit 10(r) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 28, 2024, filed with the Securities and Exchange Commission on March 13, 2025.

Subsidiaries of the Registrant.

(Filed herewith)

(Previously Filed)

Consent of EisnerAmper, LLP (Filed herewith)

Consent of WithumSmith+Brown, PC.

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RCM Technologies, Inc.

March 13, 2025

April 3, 2026

/s/ Bradley S.

Executive Chairman and President

March 13, 2025

April 3, 2026

Chief Financial Officer, Treasurer and Secretary

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

March 13, 2025

/s/ Bradley S.

Executive Chairman and President

March 13, 2025

Chief Financial Officer, Treasurer and Secretary (Principal Financial and Accounting Officer)

March 13, 2025

/s/ Chigozie O.

March 13, 2025

/s/ Swarna Kakodkar

Swarna Kakodkar

March 13, 2025

/s/ Jayanth S.

RCM TECHNOLOGIES, INC.

INDEX TO FINANCIAL STATEMENTS AND SCHEDULES

Report of Independent Registered Public Accounting Firm –

WithumSmith+Brown, PC - Consolidated Financial Statements,

December 28, 2024 and December 30, 2023

Report of Independent Registered Public Accounting Firm –

WithumSmith+Brown, PC- Opinion on Internal Controls over

Financial Reporting

Consolidated Balance Sheets, December 28, 2024 and December 30, 2023

Consolidated Statements of Operations, Fiscal Years Ended

December 28, 2024 and December 30, 2023

Consolidated Statements of Comprehensive Income (Loss), Fiscal Years Ended

December 28, 2024 and December 30, 2023

Consolidated Statements of Changes in Stockholders’ Equity, Fiscal Years Ended

December 28, 2024 and December 30, 2023

Consolidated Statements of Cash Flows, Fiscal Years Ended

December 28, 2024 and December 30, 2023

Report of Independent Registered Public Accounting Firm – EisnerAmper, LLP (PCAOB ID No.

274 ) - Consolidated Financial Statements, January 3, 2026 F-2

Report of Independent Registered Public Accounting Firm – EisnerAmper, LLP (PCAOB ID No.

274) - Opinion on Internal Controls over Financial Reporting F-4

Report of Independent Registered Public Accounting Firm – WithumSmith+Brown, PC- Consolidated Financial Statements, December 28, 2024 F-6

Consolidated Balance Sheets, January 3, 2026 and December 28, 2024

Consolidated Statements of Operations, Fiscal Years Ended January 3, 2026, and December 28, 2024 F-8

Consolidated Statements of Comprehensive Income, Fiscal Years Ended January 3, 2026, and December 28, 2024

Consolidated Statements of Changes in Stockholders’ Equity, Fiscal Years Ended January 3, 2026, and December 28, 2024

Consolidated Statements of Cash Flows, Fiscal Years Ended January 3, 2026, and December 28, 2024

Notes to Consolidated Financial Statements

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RCM Technologies, Inc.

and Subsidiaries:

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of RCM Technologies, Inc.

and Subsidiaries (the “Company”) as of December 28, 2024 and December 30, 2023, the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity and cash flows for the fiscal years ended December 28, 2024 and December 30, 2023, and the related notes (collectively referred to as the "consolidated financial statements").

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 28, 2024 and December 30, 2023, and the results of its operations and its cash flows for the fiscal years ended December 28, 2024 and December 30, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 28, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 13, 2025, expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting.

We have audited the accompanying consolidated balance sheet of RCM Technologies, Inc.

and Subsidiaries (the “Company”) as of January 3, 2026, and the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Company as of January 3, 2026, and the consolidated results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of January 3, 2026, based on criteria established in Internal Control - Integrated Framework ( 2013 ) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated April 3, 2026 expressed an adverse opinion.

Basis for Opinion

The Company’s management is responsible for these consolidated financial statements.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that responds to those risks.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition – Fixed-Price Contracts

Description of the Matter

As disclosed in Note 1 to the consolidated financial statements, the Company generally recognizes revenue over time as performance obligations are satisfied.

For fixed price contracts, the Company generally measures its progress to completion using an input measure of total costs incurred divided by total costs expected to be incurred.

Recognition of revenue and profit over time as performance obligations are satisfied is highly judgmental as it required the Company to prepare estimates of total contract revenue and total contract costs, including costs to complete contracts that are in process.

These estimates are dependent on a number of subjective factors and involve judgment as changes in these assumptions could have an impact on the amount of revenue recognized.

Audit Response

We obtained an understanding, evaluated the design and tested the operating effectiveness of the controls over the timing of revenue recognition, including testing the internal controls over the proper accumulation of labor costs by contract as well as the approval of monthly and weekly invoices for accuracy and completeness and reviewing key provisions and deliverables within customer contracts.

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition – Expected Costs to Complete Fixed-Price Contracts

As disclosed in Note 1 to the financial statements, the Company derives revenue from contracts with customers to provide services under time‑and‑materials, fixed‑price, and permanent placement arrangements.

Fixed‑price contract revenue recognized for the year ended January 3, 2026 was $73.2 million, representing approximately 23% of the Company’s revenue.

A substantial portion of fixed-price contract revenue is recognized over time using an input measure (i.e., costs incurred to date relative to total estimated costs at completion) to measure progress.

The Company recognizes revenue on these fixed-price contracts as performance obligations are satisfied over time.

Recognition of revenue as performance obligations are satisfied is highly judgmental as it required the Company to prepare estimates of the costs to complete contracts that are in process.

We identified the expected costs to complete these fixed-price contracts as a critical audit matter due to the complexity and subjectivity of management’s estimate of the progress towards completion of its projects.

This in turn led to a high degree of auditor judgement and subjectivity and significant audit effort was required in performing procedures to evaluate management’s determination of the project completion progress and related expected costs to complete.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements.

We obtained an understanding and evaluated the design of controls relating to the Company's revenue recognition of fixed-price contracts and determination of expected costs to complete.

We evaluated management’s application of their revenue recognition policies in the determination of revenue recognition conclusions.

Our audit procedures included, among other, selecting a sample of revenue transactions and performing the following procedures:

we reviewed the signed contract;

we reviewed the recorded timesheet data related to the selected invoices, which corroborated management's assessment towards the completion of the performance obligation;

and we reviewed the signed contract related to the selected invoice, noting each task has an agreed upon unit price per contract and the unit price matched what was shown on the invoice.

We also tested for proper revenue recognition cut off.

Our audit procedures included, among others, selecting a sample of fixed-price projects and performing the following procedures:

(i) testing the transaction price, which included reading contracts and other documents, (ii) evaluating the significant assumptions used to develop the estimates of project progress and costs to complete for reasonableness, (iii) performing direct inquiry with project managers regarding project status and judgements made in estimates in order to corroborate the significant assumptions used to develop the estimates of project progress and expected costs to complete, and (iv) recalculating the amount of revenue recognized.

/s/ EisnerAmper LLP

We have served as the Company’s auditor since 2025.

/s/ WithumSmith+Brown, PC

Red Bank, New Jersey

March 13, 2025

PCAOB ID Number 100

EISNERAMPER LLP

Philadelphia, Pennsylvania

April 3, 2026

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

1 unchanged sentence

RCM Technologies, Inc.

and Subsidiaries:

Opinion on Internal Control Over Financial Reporting

Opinion on the Internal Control over Financial Reporting

We have audited RCM Technologies, Inc.

and Subsidiaries’ (the “Company”) internal control over financial reporting as of December 28, 2024, based on the criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 28 , 2024, and the results of its operations and its cash flows for the year ended December 28 , 2024, in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 28 , 2024, based on criteria established in 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

and Subsidiaries’ (the “Company”) internal control over financial reporting as of January 3, 2026, based on criteria established in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

In our opinion, because of the effect of the material weaknesses described in the following paragraph on the achievement of the objectives of the control criteria, RCM Technologies, Inc.

and Subsidiaries has not maintained effective internal control over financial reporting as of January 3, 2026, based on criteria established in the Internal Control - Integrated Framework ( 2013 ) issued by COSO.

A material weakness is a control deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weaknesses have been identified and included in management’s assessment.

Management did not design and maintain effective internal controls at the entity level and over business process cycles.

Management did not design or maintain sufficient documentation during its management review controls across the Company's financial statement areas.

Management did not design and maintain effective controls related to the Company’s risk assessment and monitoring activities, including controls to periodically evaluate financial reporting risks and monitor the effectiveness of internal controls over financial reporting.

Management did not retain sufficient documentation to evidence the design and implementation of controls over the change management and logical access cycles for its timekeeping systems.

These material weaknesses were considered in determining the nature, timing, and extent of the audit tests applied in our audit of the January 3, 2026 financial statements, and this report does not affect our report dated April 3, 2026, on those financial statements.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of RCM Technologies, Inc.

and Subsidiaries as of January 3, 2026, and the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for the year then ended, and the related notes , and our report dated April 3, 2026 expressed an unqualified opinion.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting.

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

3 unchanged sentences

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

An entity’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

An entity’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the entity;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the entity are being made only in accordance with authorizations of management and directors of the entity;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the entity’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ EisnerAmper LLP

EISNERAMPER LLP

Philadelphia, Pennsylvania

April 3, 2026

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

RCM Technologies, Inc.

and Subsidiaries:

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of RCM Technologies, Inc.

and Subsidiaries (the “Company”) as of December 28, 2024, the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity and cash flows for the fiscal year ended December 28, 2024, and the related notes (collectively referred to as the "consolidated financial statements").

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 28, 2024, and the results of its operations and its cash flows for the fiscal year ended December 28, 2024, in conformity with accounting principles generally accepted in the United States of America

Basis for Opinion

The Company’s management is responsible for these consolidated financial statements.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that responds to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ WithumSmith+Brown, PC

We have served as the Company's auditor from 2022 through 2025.

Red Bank, New Jersey

March 13, 2025

PCAOB ID Number 100

RCM TECHNOLOGIES, INC.

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CONSOLIDATED BALANCE SHEETS

December 28, 2024 and December 30, 2023

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

(In thousands, except share and per share amounts)

Current assets:

Cash and cash equivalents

$ 2,922 $ 4,729

Accounts receivable, net of provision for credit losses of $ 1,570 and $ 1,600

at December 28, 2024 and December 30, 2023, respectively

Accounts receivable and contract assets, net of provision for credit losses of $ 1,229 at January 3, 2026 and $ 1,570 December 8, 2024

81,243 77,960

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Operating right of use asset

Intangible assets, net

Total other assets

14 unchanged sentences

53,884 53,633

Deferred income taxes, net, foreign

Deferred income taxes, net, domestic

Finance lease payable, net of current position

Contingent consideration from acquisitions, net of current position

Operating right of use liability, net of current position

3 unchanged sentences

88,423 98,593

Contingencies (note 16) and Commitments (note 18)

Contingencies (note 16)

Stockholders’ equity:

4 unchanged sentences

40,000,000 shares authorized;

17,838,372 shares issued and 7,602,113 shares outstanding at

December 28, 2024 and 17,673,427 shares issued and 7,844,821

shares outstanding at December 30, 2023

18,004,241 shares issued and 7,351,400 shares outstanding at January 3, 2026 and 17,838,372 shares issued and 7,602,113 shares outstanding at December 28, 2024

Additional paid-in capital

2 unchanged sentences

( 2,814 ) ( 2,920 )

Accumulated deficit

Retained earnings (accumulated deficit)

10,396 ( 5,938 )

Treasury stock, 10,236,259 shares at December 28, 2024 and

9,828,606 shares at December 30, 2023

Treasury stock, 10,652,841 shares at January 3, 2026 and 10,236,259 shares at December 28, 2024

( 84,752 ) ( 77,393 )

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CONSOLIDATED STATEMENTS OF OPERATIONS

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands, except per share amounts, unless otherwise indicated)

Fiscal Years Ended

(In thousands, except per share amounts)

$ 319,404 $ 278,380

Cost of services

231,461 198,602

87,943 79,778

Operating costs and expenses

Selling, general and administrative

60,932 56,787

Depreciation and amortization of property and equipment

3 unchanged sentences

Remeasurement of contingent consideration

Gain on sale of assets

Operating costs and expenses

62,850 57,453

Operating income

25,093 22,325

Other expense (income)

Interest expense and other, net

(Gain) loss on foreign currency transactions

Loss (gain) on foreign currency transactions

Other expense, net

Income before income taxes

22,072 20,190

Income tax expense

$ 16,334 $ 13,327

Basic net earnings per share

$ 2.19 $ 1.72

Diluted net earnings per share

$ 2.14 $ 1.68

The accompanying notes are an integral part of these consolidated financial statements.

1 unchanged sentence

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands unless otherwise indicated)

Other comprehensive (loss) income

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Fiscal Years Ended

(In thousands)

$ 16,334 $ 13,327

Other comprehensive income (loss)

Comprehensive income

$ 16,440 $ 13,220

The accompanying notes are an integral part of these consolidated financial statements.

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS ’ EQUITY

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Amounts in thousands, except share amounts, unless otherwise indicated)

Comprehensive

Fiscal Years Ended January 3, 2026 and December 28, 2024

(In thousands, except share amounts)

Treasury Stock

Comprehensive

Balance, December 30, 2023

Issuance of stock under

employee stock purchase plan

Equity compensation expense from

awards issued

Issuance of stock upon vesting

of restricted share awards

Effect of excess tax deduction

over book expense associated

with exercises of equity awards

Common stock issued for

17,673,427 $ 882 $ 116,579 $ ( 2,813 ) $ ( 19,265 ) 9,828,606 $ ( 69,593 ) $ 25,790

Issuance of stock under employee stock purchase plan

45,611 2 726 - - - - 728

Retirement of common shares withheld for taxes on equity compensation

( 44,567 ) ( 2 ) ( 1,315 ) - - - - ( 1,317 )

Equity compensation expense from awards issued

- - 2,864 - - - - 2,864

Issuance of stock upon vesting of restricted stock awards

163,901 8 ( 9 ) - - - - ( 1 )

Purchase of treasury stock

Foreign currency translation

- - - - - 407,653 ( 7,800 ) ( 7,800 )

Foreign currency translation adjustment

- - - ( 107 ) - - - ( 107 )

- - - - 13,327 - - 13,327

Balance, December 28, 2024

Issuance of stock under

employee stock purchase plan

Retirement of common shares

Equity compensation expense from

awards issued

Issuance of stock upon vesting

of restricted share awards

17,838,372 $ 890 $ 118,845 $ ( 2,920 ) $ ( 5,938 ) 10,236,259 $ ( 77,393 ) $ 33,484

Issuance of stock under employee stock purchase plan

35,545 2 613 - - - - 615

Retirement of common shares withheld for taxes on equity compensation

( 44,681 ) ( 2 ) ( 936 ) - - - - ( 938 )

Equity compensation expense from awards issued

- - 3,732 - - - - 3,732

Issuance of stock upon vesting of restricted stock awards

175,005 10 ( 10 ) - - - - -

Purchase of treasury stock

Foreign currency translation

Balance, December 28, 2024

- - - - - 416,582 ( 7,359 ) ( 7,359 )

Foreign currency translation adjustment

- - - 106 - - - 106

- - - - 16,334 - - 16,334

Balance, January 3, 2026

18,004,241 $ 900 $ 122,244 $ ( 2,814 ) $ 10,396 10,652,841 $ ( 84,752 ) $ 45,974

The accompanying notes are an integral part of these consolidated financial statements.

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands unless otherwise indicated)

Fiscal Years Ended

(In thousands)

Cash flows from operating activities:

Adjustments to reconcile net income (loss) to net cash provided by

operating activities:

$ 16,334 $ 13,327

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation and amortization

Gain on sale of assets

Equity compensation expense from awards issued

Effect of excess tax deduction on equity awards

Remeasurement of contingent consideration

Provision for credit losses on accounts receivable

Change in provision for credit losses on accounts receivable 906 ( 31 )

Deferred income tax expense

1 unchanged sentence

Changes in operating assets and liabilities:

Accounts receivable

Accounts receivable and contract assets

( 4,152 ) ( 7,271 )

Prepaid expenses and other current assets

( 676 ) ( 2,392 )

Net of transit accounts receivable and payable

( 8,325 ) ( 5,656 )

Accounts payable and accrued expenses

( 3,484 ) 1,101

Accrued payroll and related costs

Right of use liabilities

848 ( 1,265 )

Operating lease liabilities

( 1,205 ) ( 966 )

Income taxes payable

1 unchanged sentence

Total adjustments and changes in operating assets and liabilities

2,631 ( 7,157 )

Net cash provided by operating activities

1 unchanged sentence

Property and equipment acquired

Proceeds from sale of assets

( 1,595 ) ( 2,572 )

Net cash used in investing activities

( 1,595 ) ( 2,572 )

Cash flows from financing activities:

Borrowings under line of credit

Repayments under line of credit

Net (repayments) borrowings under line of credit

( 10,294 ) 4,163

Issuance of stock for employee stock purchase plan

Retirement of common shares

( 938 ) ( 1,317 )

Changes in finance lease obligations

( 850 ) ( 602 )

Contingent consideration paid

Common stock repurchase

Purchase of treasury stock

( 7,359 ) ( 7,800 )

Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents

(Decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

( 19,038 ) ( 4,828 )

Effect of exchange rate changes on cash

( 139 ) ( 325 )

Decrease in cash

( 1,807 ) ( 1,555 )

Cash at beginning of period

Cash at end of period

$ 2,922 $ 4,729

Supplemental cash flow information:

Cash paid for:

$ 2,630 $ 2,145

$ 6,105 $ 5,347

Non-cash operating activities:

Right of use assets obtained in exchange for lease obligations

Right of use assets in exchange for lease obligations

$ 745 $ 3,407

Non-cash financing activities:

Value of shares issued as contingent consideration

Software purchased under finance lease

$ 222 $ 2,172

The accompanying notes are an integral part of these consolidated financial statements.

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands, except share and per share amounts, unless otherwise indicated)

Fiscal Years Ended January 3, 2026 and December 28, 2024

(In thousands, except share and per share amounts)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 unchanged sentences

Additionally, the Company provides specialty healthcare staffing services through its Specialty Health Care Services group.

RCM’s offices are primarily located in major metropolitan centers throughout North America, with additional offices in the Netherlands, Philippines, Serbia and Germany.

RCM’s offices are primarily located in major metropolitan centers throughout North America, with additional offices in Germany, the Netherlands, the Philippines, and Serbia.

The consolidated financial statements are comprised of the accounts of the Company and its wholly owned subsidiaries.

All significant intercompany accounts and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

The Company considers its holdings of highly liquid money-market instruments and certificates of deposit to be cash equivalents if the securities mature within 90 days from the date of acquisition.

These investments are carried at cost, which approximates fair value.

The Company has significant cash balances at financial institutions, which, throughout the year, regularly exceed the federally insured limit of $250.

Any loss incurred or lack of access to uninsured funds could have a significant adverse impact on the Company’s financial condition, results of operations, and cash flows.

The Company held $ 269 and $ 103 of cash and cash equivalents in Canadian banks as of December 28, 2024 and December 30, 2023, respectively, which was held principally in Canadian dollars.

The Company held $ 496 and $ 638 of cash and cash equivalents in Serbian banks as of December 28, 2024 and December 30, 2023, respectively, which was held in various currencies.

The Company held $ 556 of cash and cash equivalents in German banks as of December 28, 2024, which was held primarily in Euros.

The office in Germany was opened in April 2023.

The Company held $ 2 and $ 4 of cash and cash equivalents in Netherlands banks as of December 28, 2024 and December 30, 2023, respectively, which was held in various currencies.

The Company held $ 146 and $ 269 of cash in Canadian banks as of January 3, 2026 and December 28, 2024, respectively, which was held principally in Canadian dollars.

The Company held $ 651 and $ 556 of cash in German banks as of January 3, 2026 and December 28, 2024, respectively, which was held primarily in Euros.

The Company held $ 487 and $ 496 of in Serbian banks as of January 3, 2026 and December 28, 2024, respectively, which was held in various currencies.

The Company held $ 3 and $ 2 of cash in Netherlands banks as of January 3, 2026 and December 28, 2024, respectively, which was held in various currencies.

The Company held $ 9 of cash in Philippines banks as of January 3, 2026, which was held in U.S.

Fair Value of Financial Instruments

The Company’s carrying value of financial instruments, consisting primarily of accounts receivable, transit accounts receivable, accounts payable and accrued expenses, transit accounts payable and borrowings under line of credit approximates fair value due to their liquidity or their short-term nature and the line of credit’s variable interest rate.

The Company’s carrying value of financial instruments, consisting primarily of accounts receivable and contract assets, net of provision for credit losses, transit accounts receivable, accounts payable and accrued expenses, transit accounts payable and borrowings under line of credit approximates fair value due to their liquidity or their short-term nature and the line of credit’s variable interest rate.

The Company does not have derivative products in place to manage risks related to foreign currency fluctuations for its foreign operations or for interest rate changes.

9 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands, except share and per share amounts, unless otherwise indicated)

Fiscal Years Ended January 3, 2026 and December 28, 2024

(In thousands, except share and per share amounts)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Unbilled Accounts Receivable and Work-in-Process

Unbilled Accounts Receivable and Contract Assets

Unbilled receivables primarily represent revenue earned whereby those services are ready to be billed as of the balance sheet ending date.

Work-in-process primarily represents revenue earned under contracts which the Company is contractually precluded from invoicing until future dates as project milestones are realized.

The Company follows Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers when recording revenue on unbilled accounts receivable and work-in-process.

Contract assets primarily represents revenue earned under contracts which the Company is contractually precluded from invoicing until future dates as project milestones are realized.

The Company follows Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers when recording revenue on unbilled accounts receivable and contract assets.

See Note 4 for further details.

18 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands, except share and per share amounts, unless otherwise indicated)

Fiscal Years Ended January 3, 2026 and December 28, 2024

(In thousands, except share and per share amounts)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

10 unchanged sentences

” The Company tests goodwill for impairment on an annual basis as of the last day of the Company’s fiscal December each year or more frequently if events occur or circumstances change indicating that the fair value of the goodwill may be below its carrying amount.

The Company reviews industry and market conditions, reported unit-specific events, and overall financial performance to determine if any indicators of impairment of goodwill exist.

The Company has three reporting units.

1 unchanged sentence

This approach uses earnings/revenue multiples of similar companies recently completing acquisitions and the ability of our reporting units to generate cash flows as measures of fair value of our reporting units.

The Company did not record a goodwill impairment charge in fiscal years ended December 28, 2024 and December 30, 2023.

The Company did not record a goodwill impairment charge in fiscal years ended January 3, 2026 and December 28, 2024.

There can be no assurance that future indicators of impairment and tests of goodwill impairment will not result in an impairment charge.

7 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands, except share and per share amounts, unless otherwise indicated)

Fiscal Years Ended January 3, 2026 and December 28, 2024

(In thousands, except share and per share amounts)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

In accordance with FASB ASC 350 - 40 “Accounting for Internal Use Software,” certain costs related to the development or purchase of internal-use software are capitalized and amortized over the estimated useful life of the software.

During the fiscal years ended December 28, 2024 and December 30, 2023, the Company capitalized $ 4,141 and $ 1,947 , respectively, for software costs.

The net balance after accumulated depreciation for all software costs capitalized as of December 28, 2024 and December 30, 2023 was $ 5,622 and $ 2,325 , respectively.

During the fiscal years ended January 3, 2026 and December 28, 2024, the Company capitalized $ 788 and $ 4,141 , respectively, for software costs.

The net balance after accumulated amortization for all software costs capitalized as of January 3, 2026 and December 28, 2024 was $ 5,140 and $ 5,622 , respectively.

The Company makes judgments and interpretations based on enacted tax laws, published tax guidance, as well as estimates of future earnings.

2 unchanged sentences

In the event that actual results differ from these estimates and assessments, additional valuation allowances may be required.

The Company did not have any valuation allowance as of December 28, 2024 and December 30, 2023.

The Company accounts for income taxes in accordance with FASB ACS 740 “Income Taxes” (FASB ASC 740 ) which requires an asset and liability approach of accounting for income taxes.

The Company did not have any valuation allowance as of January 3, 2026 and December 28, 2024.

The Company accounts for income taxes in accordance with FASB ASC 740 “Income Taxes” (FASB ASC 740 ) which requires an asset and liability approach of accounting for income taxes.

FASB ASC 740 requires assessment of the likelihood of realizing benefits associated with deferred tax assets for purposes of determining whether a valuation allowance is needed for such deferred tax assets.

9 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands, except share and per share amounts, unless otherwise indicated)

Fiscal Years Ended January 3, 2026 and December 28, 2024

(In thousands, except share and per share amounts)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

11 unchanged sentences

The Company’s Engineering Services and Life Sciences, Data and Solutions segments perform consulting and project solution services.

The Healthcare segment specializes in long-term and short-term staffing and placement services to hospitals, schools and long-term care facilities amongst others.

The Healthcare segment specializes in long-term and short-term staffing and placement services to hospitals, schools and long-term care facilities among others.

All of the Company’s segments perform staff augmentation services and derive revenue from permanent placement fees.

The following table presents our revenue disaggregated by revenue source for the fiscal years ended December 28, 2024 and December 30, 2023:

The following table presents our revenue disaggregated by revenue source for the fiscal years ended January 3, 2026 and December 28, 2024:

Specialty Health Care:

20 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands, except share and per share amounts, unless otherwise indicated)

Fiscal Years Ended January 3, 2026 and December 28, 2024

(In thousands, except share and per share amounts)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

1 unchanged sentence

Time and Material

The Company’s Health Care segment predominantly recognizes revenue through time and material work while its Engineering and Life Sciences, Data and Solutions segments recognize revenue through both time and material and fixed fee work.

The Company’s time and material contracts are typically based on the number of hours worked at contractually agreed upon rates, therefore revenue associated with these time and materials contracts are recognized based on hours worked at contracted rates.

From time to time and predominantly in our Engineering segment, the Company enters into contracts requiring the completion of specific deliverables.

The Company has master services agreements with many of its customers that broadly define terms and conditions.

Actual services performed under fixed fee arrangements are typically delivered under purchase orders that more specifically define terms and conditions related to that fixed fee project.

While these master services agreements can often span several years, the Company’s fixed fee purchase orders are typically performed over six to nine month periods.

In instances where project services are provided on a fixed-price basis, revenue is recorded in accordance with the terms of each contract.

For engineering contracts estimated costs are budgeted by project, the Company then recognizes revenue by applying the costs incurred to date against the total budgeted costs and applying the percentage of completed cost against the total contract value to recognize revenue for each period.

In certain instances, revenue is invoiced at the time certain milestones are reached, as defined in the contract.

Revenue under these arrangements are recognized as the costs on these contracts are incurred.

From time-to-time, amounts paid in excess of revenue earned and recognized are recorded as deferred revenue.

Some contracts also limit revenue and billings to specified maximum amounts.

Provisions for contract losses, if any, are made in the period such losses are determined.

For contracts where there is a specific deliverable and the work is not complete and the revenue is not recognized, the costs incurred are deferred as a prepaid asset.

The associated costs are expensed when the related revenue is recognized.

The Company’s Health Care segment predominantly generates revenue from time-and-materials arrangements.

In contrast, its Engineering and Life Sciences, Data and Solutions segments generate revenue from both time-and-materials and fixed-fee arrangements.

Revenue from time-and-materials contracts is recognized over time as performance obligations are satisfied, because the customer simultaneously receives and consumes the benefits of the services performed.

These contracts are typically based on the number of hours worked at contractually agreed-upon rates.

Accordingly, revenue is recognized based on hours worked at contracted rates, which represents an output method that directly reflects the value of services transferred to the customer.

From time to time, primarily within the Engineering segment, the Company enters into fixed-fee contracts requiring the delivery of specified services or project-based deliverables.

The Company operates under master services agreements that establish general terms and conditions, with project-specific purchase orders defining the scope, pricing, and duration of individual engagements, which are typically performed over 6 to 9 months.

Revenue from fixed-fee arrangements is recognized over time as performance obligations are satisfied, as the customer simultaneously receives and consumes the benefits of the services performed.

The Company measures progress toward completion using either an input method (e.g., costs incurred relative to total estimated costs) or an output method (e.g., achievement of contractual milestones or delivery of specified units), depending on which method best depicts the transfer of control of services to the customer.

The Company primarily applies an input method based on costs incurred relative to total estimated costs (cost-to-cost method).

In contrast, output methods are used in arrangements in which milestones or deliverables correspond directly to the transfer of control to the customer.

Billings in excess of revenue recognized are recorded as contract liabilities (deferred revenue), while revenue recognized in excess of billings is recorded as contract assets.

Certain contracts may include provisions that limit total billings or the timing of revenue recognition.

The Company evaluates contracts for potential losses and records provisions for estimated losses in the period such losses become probable and can be reasonably estimated.

Costs incurred in fulfilling contracts are expensed as incurred unless they qualify for capitalization under applicable accounting guidance.

Permanent Placement Services

3 unchanged sentences

In the event a candidate is not retained for the 90 -day period, the Company will provide a suitable replacement candidate.

In the event a replacement candidate cannot be located, the Company will provide a prorated refund to the client.

If a replacement candidate cannot be located, the Company will provide a prorated refund to the client.

An allowance for refunds, based upon the Company’s historical experience, is recorded in the financial statements.

Permanent placement revenue was $ 1.5 million and $ 1.7 million for the fiscal years ended December 28, 2024 and December 30, 2023, respectively.

The deferred revenue balance as of December 28, 2024 and December 30, 2023 was $ 4.2 million and $ 1.9 million, respectively.

Permanent placement revenue was $ 1.7 million for both of the fiscal years ended January 3, 2026 and December 28, 2024.

The deferred revenue balance as of January 3, 2026 and December 28, 2024 was $ 14.8 million and $ 4.2 million, respectively.

Revenue is recognized when the service has been performed.

Deferred revenue may be recognized over a period exceeding one year from the time it was recorded on the balance sheet, although this is an infrequent occurrence.

In fiscal years ended December 28, 2024 and December 30, 2023, the Company recognized revenue of $ 1.9 million and $ 1.1 million, respectively, that was included in deferred revenue at the beginning of the period.

In fiscal years ended January 3, 2026 and December 28, 2024, the Company recognized revenue of $ 4.2 million and $ 1.9 million, respectively, that was included in deferred revenue at the beginning of the period.

RCM TECHNOLOGIES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands, except share and per share amounts, unless otherwise indicated)

Fiscal Years Ended January 3, 2026 and December 28, 2024

(In thousands, except share and per share amounts)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

9 unchanged sentences

The Company is typically obligated to pay the subcontractor or staffing agency, whether or not the client pays the Company.

The Company’s transit accounts payable generally exceeds the Company’s transit accounts receivable but absolute amounts and spreads fluctuate significantly from quarter to quarter in the normal course of business.

The transit accounts receivable was $ 7.3 million and related transit accounts payable was $ 23.9 million, for a net payable of $ 16.6 million, as of December 28, 2024.

The transit accounts receivable was $ 8.9 million and related transit accounts payable was $ 31.1 million, for a net payable of $ 22.2 million, as of December 30, 2023.

The Company’s transit accounts payable generally exceed the Company’s transit accounts receivable, but absolute amounts and spreads fluctuate significantly from quarter to quarter in the normal course of business.

The transit accounts receivable were $ 8.0 million, and related transit accounts payable were $ 16.2 million, for a net payable of $ 8.2 million, as of January 3, 2026.

The transit accounts receivable were $ 7.3 million, and related transit accounts payable were $ 23.9 million, for a net payable of $ 16.6 million, as of December 28, 2024.

Concentrations

During the fiscal year ended December 28, 2024, the Company had two customers exceed 10% of consolidated revenue, representing 19.5 % and 14.1 % of consolidated revenue, respectively.

During the fiscal year ended January 3, 2026, the Company had two customers exceed 10% of consolidated revenue, representing 20.8 % and 13.6 % of consolidated revenue, respectively.

During the fiscal year ended December 28, 2024, the Company had two customers exceed 10% of consolidated revenue, representing 19.5 % and 14.1 % of consolidated revenue, respectively.

All customers exceeding 10% of consolidated revenue during the periods presented are included in the Company’s Specialty Health Care segment.

The Company’s five , ten and twenty largest customers accounted for approximately 48.5 %, 60.1 % and 70.6 %, respectively, of the Company’s revenue for the fiscal year ended December 28, 2024.

The Company’s five , ten and twenty largest customers accounted for approximately 51.0 %, 64.9 % and 75.0 %, respectively, of the Company’s revenue for the fiscal year ended January 3, 2026.

The Company’s five , ten and twenty largest customers accounted for approximately 48.5 %, 60.1 % and 70.6 %, respectively, of the Company’s revenue for the fiscal year ended December 28, 2024.

As of January 3, 2026, three clients represented more than 10% of the Company's accounts receivable, net, representing 18.1 % and 16.1 % from the Company's two largest Specialty Health Care clients and 17.2 % from the Company's largest Engineering client.

As of December 28, 2024, three clients represented more than 10% of the Company's accounts receivable, net, representing 20.4 % and 12.5 % from the Company's two largest Specialty Health Care clients and 11.4 % from the Company's largest Engineering client.

As of December 30, 2023, two clients represented more than 10% of the Company's accounts receivable, net, representing 21.2 % and 14.7 % from the Company's two largest Specialty Health Care clients.

Segment Reporting

The Company follows ASC 280, “Segment Reporting,” which establishes standards for companies to report information about operating segments, geographic areas and major customers.

The Company reports segment information based on the management approach, which designates the internal reporting used by the Chief Operating Decision Makers (“CODMs”), who were Bradley Vizi, Chief Executive Officer, and Kevin Miller.

Chief Financial Officer.

The Company’s CODMs are responsible for making decisions regarding the Company’s business, including resource allocations and performance assessments based on historical and future segment revenue, operating expenses, and operating income (loss) before interest and taxes.

RCM TECHNOLOGIES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands, except share and per share amounts, unless otherwise indicated)

Fiscal Years Ended January 3, 2026 and December 28, 2024

(In thousands, except share and per share amounts)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

20 unchanged sentences

See Note 11 for additional share-based compensation information.

Restricted share and share unit awards are recognized at their fair value.

Restricted stock and stock unit awards are recognized at their fair value.

The amount of compensation cost is measured on the grant date fair value of the equity instrument issued.

The compensation cost of the restricted share and share unit awards is recognized over the vesting period of the restricted share and share unit awards on a straight-line basis.

Restricted share and share unit awards typically include dividend accrual equivalents, which means that any dividends paid by the Company during the vesting period become due and payable after the vesting period assuming the grantee’s restricted share or share unit award fully vests.

The compensation cost of the restricted stock and stock unit awards is recognized over the vesting period of the restricted stock and stock unit awards on a straight-line basis.

Restricted stock and stock unit awards typically include dividend accrual equivalents, which means that any dividends paid by the Company during the vesting period become due and payable after the vesting period assuming the grantee’s restricted stock and stock unit award fully vests.

Dividends for these grants are accrued on the dividend payment dates and included in accounts payable and accrued expenses on the accompanying consolidated balance sheet.

Dividends for restricted share and share unit awards that ultimately do not vest are forfeited.

Dividends for restricted stock and stock unit awards that ultimately do not vest are forfeited.

RCM TECHNOLOGIES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands, except share and per share amounts, unless otherwise indicated)

Fiscal Years Ended January 3, 2026 and December 28, 2024

(In thousands, except share and per share amounts)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

1 unchanged sentence

Advertising costs are expensed as incurred.

Total advertising expense was $ 719 and $ 781 for the fiscal years ended December 28, 2024 and December 30, 2023, respectively.

Total advertising expense was $ 838 and $ 719 for the fiscal years ended January 3, 2026 and December 28, 2024, respectively.

Fair Value Measurements

10 unchanged sentences

The Company follows a 52/53 week fiscal reporting calendar ending on the Saturday closest to December 31.

The fiscal years ended December 28, 2024 ( fiscal 2024 ) and December 30, 2023 ( fiscal 2023 ) consisted of fifty-two weeks each.

The fiscal years ended January 3, 2026 ( fiscal 2025 ) and December 28, 2024 ( fiscal 2024 ) consisted of fifty-three and fifty-two weeks, respectively.

Reclassification

Certain prior year amounts have been reclassified to conform with the current year presentation.

These classifications had no effect on the previously reported results of operations.

RCM TECHNOLOGIES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands, except share and per share amounts, unless otherwise indicated)

Fiscal Years Ended January 3, 2026 and December 28, 2024

(In thousands, except share and per share amounts)

USE OF ESTIMATES AND UNCERTAINTIES

1 unchanged sentence

Actual results could differ from those estimates.

The Company uses estimates to determine a provision for credit losses on its accounts receivable, contingent consideration, litigation, medical claims, vacation, goodwill impairment, if any, equity compensation, the tax rate applied and the valuation of certain assets and liability accounts.

The Company uses estimates to determine a provision for credit losses on its accounts receivable, progress on fixed fee contracts, contingent consideration, litigation, medical claims, workers compensation claims, goodwill impairment, if any, equity compensation, the tax rate applied and the valuation of certain assets and liability accounts.

In addition, the Company reviews its estimated costs to complete a contract and adjusts those costs when necessary.

8 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands, except share and per share amounts, unless otherwise indicated)

ACCOUNTS RECEIVABLE

The Company’s accounts receivable are comprised as follows:

Fiscal Years Ended January 3, 2026 and December 28, 2024

(In thousands, except share and per share amounts)

ACCOUNTS RECEIVABLE AND CONTRACT ASSETS, NET

The Company’s accounts receivable and contract assets, net are comprised as follows:

Billed accounts receivable

$ 47,987 $ 55,224

Unbilled accounts receivable

23,942 16,931

Work-in-progress

Contract assets

Provision for credit losses

( 1,229 ) ( 1,570 )

Accounts receivable, net

Accounts receivable and contract assets, net

$ 81,243 $ 77,960

Unbilled receivables primarily represent revenue earned whereby those services are ready to be billed as of the balance sheet ending date.

Work-in-progress primarily represents revenue earned under contracts which the Company contractually invoices at future dates.

Contract assets primarily represents revenue earned under contracts which the Company contractually invoices at future dates.

Activity in the Company’s provision for credit losses consisted of the following:

Fiscal Years Ended

Balance at beginning of year

$ 1,570 $ 1,600

Increase in provision for credit losses

Write-offs of receivables to provision for credit losses

( 1,247 ) ( 30 )

Balance at end of year

$ 1,229 $ 1,570

PROPERTY AND EQUIPMENT

9 unchanged sentences

The Company periodically writes off fully depreciated and amortized assets.

The Company wrote off fully depreciated and amortized assets of $ 1,604 and $ 1,201 during the fiscal years ended December 28, 2024 and December 30, 2023, respectively.

For the fiscal years ended December 28, 2024 and December 30, 2023, depreciation and amortization expense for property and equipment was $ 1,419 and $ 1,032 , respectively.

The Company wrote off fully depreciated and amortized assets of $ 487 and $ 1,604 during the fiscal years ended January 3, 2026 and December 28, 2024, respectively.

For the fiscal years ended January 3, 2026 and December 28, 2024, depreciation and amortization expense for property and equipment was $ 1,918 and $ 1,419 , respectively.

RCM TECHNOLOGIES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands, except share and per share amounts, unless otherwise indicated)

Fiscal Years Ended January 3, 2026 and December 28, 2024

(In thousands, except share and per share amounts)

ACQUISITIONS AND DIVESTITURES

2 unchanged sentences

Goodwill arising from the acquisitions is attributable to expected sales synergies from combining the operations of the acquired business with those of the Company.

Potential future contingent payments to be made to all active acquisitions after December 28, 2024 are capped at a cumulative maximum of $ 0.2 million.

The changes in the liability for contingent consideration from acquisitions for the fiscal years ended December 28, 2024 and December 30, 2023 are as follows:

Balance as of December 31, 2022

Contingent payments - cash

Contingent payments - stock

As of January 3, 2026, there are no active acquisitions whereby contingent consideration could be paid.

The changes in the liability for contingent consideration from acquisitions for the fiscal years ended January 3, 2026 and December 28, 2024 are as follows:

Balance as of December 30, 2023

1 unchanged sentence

Balance as of December 28, 2024

Future Contingent Payments

As of December 28, 2024, the Company had one acquisition agreement whereby additional contingent consideration may be earned by the sellers:

effective September 30, 2018, the Company acquired certain assets of Thermal Kinetics Engineering, PLLC and Thermal Kinetics Systems, LLC.

The Company estimates future contingent payments at December 28, 2024 as follows:

Payable in fiscal 2025

Contingent payments - cash

Balance as of January 3, 2026

For acquisitions that involve contingent consideration, the Company records a liability equal to the fair value of the estimated contingent consideration obligation as of the acquisition date.

7 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands, except share and per share amounts, unless otherwise indicated)

Fiscal Years Ended January 3, 2026 and December 28, 2024

(In thousands, except share and per share amounts)

ACQUISITIONS AND DIVESTITURES (CONTINUED)

Estimates of future contingent payments are subject to significant judgment and actual payments may materially differ from estimates.

The Company estimates future contingent consideration payments based on forecasted performance and recorded the fair value of those expected payments as of December 28, 2024.

Contingent consideration related to acquisitions is recorded at fair value (level 3 ) with changes in fair value recorded in operating expense.

Divestiture of Assets

On July 30, 2021, the Company sold the principal assets and certain liabilities of its Pickering and Kincardine offices in Ontario, Canada.

These two offices were often called Canada Power Systems and principally provided engineering services to two major nuclear power providers in Canada.

The two Canada Power Systems offices were part of a reporting unit within the Company’s Engineering segment.

The purchase agreement provided for a typical indemnity escrow held by an independent escrow agent.

The net proceeds released from the escrow account generated a gain on sale of assets of $ 0.4 million for the year ended December 30, 2023.

Goodwill represents the premium paid over the fair value of the net tangible and intangible assets acquired in business combinations.

The Company tests goodwill for impairment on an annual basis as of the last day of the Company's fiscal year or more frequently if events occur or circumstances change indicating that the fair value of goodwill may be below the carrying amount.

The Company reviewed industry and market conditions, reporting unit specific events as well as overall financial performance and determined that no indicators of impairment of goodwill existed in its Engineering and Specialty Health Care segments during the fiscal year ended December 28, 2024 and for all segments during the year ended December 30, 2023.

Since the Company remeasured contingent consideration associated with its Life Sciences, Data and Solutions segment, the Company determined that further testing was necessary.

After comparing the fair value of the Life Sciences, Data and Solutions segment to its carrying amount, the Company determined that no impairment loss occurred for the Company’s goodwill during the fiscal years ended December 28, 2024 or December 30, 2023.

The changes in the carrying amount of goodwill for the fiscal years ended December 28, 2024 and December 30, 2023 are as follows:

Balance as of December 31, 2022

$ 11,918 $ 2,398 $ 7,831 $ 22,147

No change in fiscal 2023

Balance as of December 30, 2023

$ 11,918 $ 2,398 $ 7,831 $ 22,147

No change in fiscal 2024

Balance as of December 28, 2024

The Company tests goodwill for impairment on an annual basis as of the last day of the Company's fiscal year, or more frequently if events or circumstances indicate that the fair value of goodwill may be below its carrying amount.

The Company reviewed industry and market conditions, reported unit-specific events, and overall financial performance, and determined that no indicators of impairment of goodwill existed during the fiscal year ended January 3, 2026.

As a result of such review, no impairment loss was recorded for the Company’s intangible assets during the fiscal year ended January 3, 2026.

With respect to the fiscal year ended December 28, 2024, since the Company remeasured contingent consideration associated with its Life Sciences, Data, and Solutions segment in fiscal 2024, the Company determined that further testing was necessary.

After comparing the fair value of the Life Sciences, Data and Solutions segment to its carrying amount, the Company determined that no impairment loss occurred for the Company’s goodwill related to that segment during the fiscal year ended December 28, 2024.

There were no changes in the carrying amount of goodwill for the fiscal years ended January 3, 2026 and December 28, 2024.

The amounts by the Company’s segments are as follows:

Balance as of January 3, 2026

$ 11,918 $ 2,398 $ 7,831 $ 22,147

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands, except share and per share amounts, unless otherwise indicated)

Fiscal Years Ended January 3, 2026 and December 28, 2024

(In thousands, except share and per share amounts)

INTANGIBLE ASSETS

4 unchanged sentences

The Company determined that during the fiscal year ended December 28, 2024, its intangible asset balance became worthless and was written off.

The changes in the carrying amount of intangible assets for the fiscal years ended December 28, 2024 and December 30, 2023 are as follows:

Balance as of December 31, 2022

$ - $ - $ 865 $ 865

Amortization in fiscal 2023

The changes in the carrying amount of intangible assets for the fiscal year ended December 28, 2024 are as follows:

Balance as of December 30, 2023

4 unchanged sentences

$ - $ - $ - $ -

The Company did not acquire or otherwise add any intangible assets during the fiscal year ended January 3, 2026.

LINE OF CREDIT

On February 20, 2026, the Company amended (Amendment 1 ) the Fifth Amended and Restated Loan Agreement, dated as of December 3, 2024, with Citizens Bank.

Under Amendment 1, the total commitment is increased from a maximum limit of $ 65.0 million to a maximum limit of $ 75.0 million.

The increased limit shall apply from February 20, 2026 through August 31, 2026.

From and after September 1, 2026 through the Maturity Date of the Fifth Amended and Restated Loan Agreement, the total commitment shall revert to $ 65.0 million.

All other material terms remain unchanged.

On December 3, 2024, the Company entered into a Fifth Amended and Restated Loan Agreement (the “Fifth Amended and Restated Loan Agreement”) with Citizens Bank, N.A., as lender (in such capacity, the “Lender”) and as administrative agent and arranger (in such capacity, the “Administrative Agent”), to amend and restate in its entirety that certain Fourth Amended and Restated Agreement dated as of April 24, 2023 ( as the same has been amended and modified prior to the date hereof, the “Existing Loan Agreement”).

6 unchanged sentences

Unused line fees are recorded as interest expense.

The effective weighted average interest rate, including unused line fees, for the fiscal years ended December 28, 2024 and December 30, 2023 were 6.6 % and 6.5 %, respectively.

The effective weighted average interest rate, including unused line fees, for the fiscal years ended January 3, 2026 and December 28, 2024 were 6.3 % and 6.6 %, respectively

RCM TECHNOLOGIES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands, except share and per share amounts, unless otherwise indicated)

Fiscal Years Ended January 3, 2026 and December 28, 2024

(In thousands, except share and per share amounts)

LINE OF CREDIT (CONTINUED)

1 unchanged sentence

The Revolving Credit Facility also contains various financial and non-financial covenants, such as a covenant that restricts the Company’s ability to borrow in order to pay dividends.

As of December 28, 2024, the Company was in compliance with all covenants contained in the Revolving Credit Facility.

As of January 3, 2026, the Company was in compliance with all covenants contained in the Revolving Credit Facility.

The Company believes that it will maintain compliance with its financial covenants for the foreseeable future.

Borrowings under the line of credit as of December 28, 2024 and December 30, 2023 were $ 35.0 million and $ 30.8 million, respectively.

There were letters of credit outstanding at December 28, 2024 and December 30, 2023 for $ 7.4 million and $ 2.0 million, respectively.

At December 28, 2024 and December 30, 2023, the Company had availability for additional borrowings under the Revolving Credit Facility of $ 22.6 million and $ 12.1 million, respectively.

Borrowings under the line of credit as of January 3, 2026 and December 28, 2024 were $ 24.7 million and $ 35.0 million, respectively.

At January 3, 2026 and December 28, 2024, there were letters of credit outstanding for $ 13.2 and $ 7.4 million, respectively.

At January 3, 2026 and December 28, 2024, the Company had availability for additional borrowings under the Revolving Credit Facility of $ 27.1 million and $ 22.6 million, respectively.

PER SHARE DATA

The Company uses the treasury stock method to calculate the weighted-average shares outstanding used for diluted earnings per share.

The number of weighted-average shares used to calculate basic and diluted earnings per share for the fiscal years ended December 28, 2024 and December 30, 2023 was determined as follows:

The number of weighted-average shares used to calculate basic and diluted earnings per share for the fiscal years ended January 3, 2026 and December 28, 2024 was determined as follows:

Fiscal Years Ended

1 unchanged sentence

7,449,377 7,737,063

Dilutive effect of outstanding restricted share awards

Dilutive effect of outstanding restricted stock awards

186,363 202,318

1 unchanged sentence

7,635,740 7,939,381

For the fiscal years ended December 28, 2024 and December 30, 2023, there were no anti-dilutive shares included in the calculation of common stock equivalents as there were no stock options outstanding.

For the fiscal years ended January 3, 2026 and December 28, 2024, there were no anti-dilutive shares included in the calculation of common stock equivalents as there were no stock options outstanding.

Unissued shares of common stock were reserved for the following purposes:

Time-based restricted stock awards outstanding

Time-based restricted stock and stock unit awards outstanding

179,037 289,421

Performance-based restricted stock awards outstanding

Performance-based restricted stock and stock unit awards outstanding

282,157 300,000

Future grants of options or shares

Future grants of options or shares available

1,248,902 295,680

5 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands, except share and per share amounts, unless otherwise indicated)

Fiscal Years Ended January 3, 2026 and December 28, 2024

(In thousands, except share and per share amounts)

SHARE BASED COMPENSATION

At December 28, 2024, the Company had two share-based employee compensation plans, the Employee Stock Purchase Plan and the 2014 Omnibus Equity Compensation Plan.

As of January 3, 2026, the Company had three share-based employee compensation plans, the Employee Stock Purchase Plan, the 2014 Omnibus Equity Compensation Plan, and the 2025 Omnibus Equity Compensation Plan.

The Company measures the fair value of share-based awards, if and when granted, based on the Black-Scholes method and using the closing market price of the Company’s common stock on the date of grant.

5 unchanged sentences

Discussion of share and share-based awards herein references awards of shares and share units.

Share-based compensation expense of $ 2.9 million and $ 2.1 million was recognized for the fiscal years ended December 28, 2024 and December 30, 2023, respectively.

Share-based compensation for performance-based equity agreements was $ 1.6 million and $ 0.7 million for the fiscal years ended December 28, 2024 and December 30, 2023, respectively.

As of December 28, 2024, there were 300,000 performance-based restricted stock awards outstanding.

Share-based compensation expense of $ 3.7 million and $ 2.9 million was recognized for the fiscal years ended January 3, 2026 and December 28, 2024, respectively.

Share-based compensation for performance-based equity agreements was $ 2.5 million and $ 1.6 million for the fiscal years ended January 3, 2026 and December 28, 2024, respectively.

As of January 3, 2026, there were 282,157 performance-based restricted stock and stock unit awards outstanding.

Share-based compensation expense is included in selling, general and administrative expense in the Company’s statement of operations.

As of December 28, 2024, the Company had $ 8.0 million of total unrecognized compensation cost, with approximately $ 2.6 million related to time-based non-vested share-based awards outstanding and $ 5.4 million related to performance-based non-vested share-based awards outstanding.

As of January 3, 2026, the Company had $ 6.0 million of total unrecognized compensation cost, with approximately $ 2.0 million related to time-based non-vested share-based awards outstanding and $ 4.0 million related to performance-based non-vested share-based awards outstanding.

The Company expects to recognize the expense associated with time-based non-vested share-based awards through fiscal 2035.

9 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands, except share and per share amounts, unless otherwise indicated)

Fiscal Years Ended January 3, 2026 and December 28, 2024

(In thousands, except share and per share amounts)

SHARE BASED COMPENSATION (CONTINUED)

4 unchanged sentences

The Company has two offering periods in the Purchase Plan, coinciding with the Company’s first two fiscal quarters and the last two fiscal quarters.

Actual shares are issued on the first business day of the subsequent offering period for the prior offering period payroll deductions.

During the fiscal years ended December 28, 2024 and December 30, 2023, there were 45,611 and 66,501 shares issued under the Purchase Plan for net proceeds of $ 0.7 million and $ 0.7 million, respectively.

As of December 28, 2024, there were 252,119 shares available for issuance under the Purchase Plan.

Compensation expense, representing the discount to the quoted market price, for the Purchase Plan for the fiscal years ended December 28, 2024 and December 30, 2023 was $ 0.3 million and $ 0.3 million, respectively.

Actual shares are typically issued on the first business day of the subsequent offering period for the prior offering period's payroll deductions.

During the fiscal years ended January 3, 2026 and December 28, 2024, there were 35,545 and 45,611 shares issued under the Purchase Plan for net proceeds of $ 0.6 million and $ 0.7 million, respectively.

As of January 3, 2026, there were 216,574 shares available for issuance under the Purchase Plan.

Compensation expense, representing the discount to the quoted market price, for the Purchase Plan for both fiscal years ended January 3, 2026 and December 28, 2024, was $ 0.3 million.

2014 Omnibus Equity Compensation Plan (the 2014 Plan)

3 unchanged sentences

The Compensation Committee of the Board of Directors determines the vesting period at the time of grant.

All stock awards typically include dividend accrual equivalents, which means that any dividends paid by the Company during the vesting period become due and payable after the vesting period assuming the grantee’s stock award fully vests.

All stock and stock unit awards typically include dividend accrual equivalents, which means that any dividends paid by the Company during the vesting period become due and payable after the vesting period, assuming the grantee’s stock award fully vests.

Dividends for these grants are accrued on the dividend payment dates and included in accounts payable and accrued expenses on the accompanying consolidated balance sheet.

As of December 28, 2024, there were no accrued dividends.

Dividends for stock awards that ultimately do not vest are forfeited.

As of January 3, 2026, there were no accrued dividends.

Dividends for stock and stock unit awards that ultimately do not vest are forfeited.

As of January 3, 2026, under the 2014 Plan, 179,037 time-based shares were outstanding, 282,157 performance-based restricted stock awards were outstanding and 248,902 shares were available for awards thereunder.

The intrinsic value of all equity grants as of January 3, 2026 and December 28, 2024 was $ 8.4 million and $ 12.5 million, respectively.

These amounts are based on the equity price on the last trading day in the period presented.

RCM TECHNOLOGIES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands, except share and per share amounts, unless otherwise indicated)

Fiscal Years Ended January 3, 2026 and December 28, 2024

(In thousands, except share and per share amounts)

SHARE BASED COMPENSATION (CONTINUED)

2014 Omnibus Equity Compensation Plan (the 2014 Plan) (Continued)

As of December 28, 2024, under the 2014 Plan, 289,421 time-based shares were outstanding, 300,000 performance-based restricted stock awards were outstanding and 295,680 shares were available for awards thereunder.

The intrinsic value of all equity grants as of December 28, 2024 and December 30, 2023 was $ 12.5 million and $ 13.8 million, respectively.

These amounts are based on the equity price on the last trading day in the period presented.

Time-Based Restricted Stock Awards

From time-to-time the Company issues time-based restricted stock awards.

The following summarizes the activity in the time-based restricted stock awards under the 2014 Plan during the fiscal year ended December 28, 2024:

2025 Omnibus Equity Compensation Plan (the 2025 Plan)

The 2025 Plan, approved by the Company’s shareholders in December 2025, provided for the issuance of up to 1,000,000 shares of the Company’s common stock to officers, non-employee directors, employees of the Company and its subsidiaries, or consultants and advisors utilized by the Company.

The expiration date of the Plan is December 17, 2035, unless the 2025 Plan is terminated earlier by the Board or is extended by the Board with the approval of the shareholders.

The Compensation Committee of the Board of Directors determines the vesting period at the time of grant.

Dividends for these grants are accrued on the dividend payment dates and included in accounts payable and accrued expenses on the accompanying consolidated balance sheet.

As of January 3, 2026, there were no accrued dividends.

Dividends for stock and stock unit awards that ultimately do not vest are forfeited.

As of January 3, 2026, under the 2025 Plan, there were no outstanding equity awards, therefore, up to 1,000,000 shares may be awarded subject to the provisions of the 2025 Plan.

Time-Based Restricted and Stock Unit Stock Awards

From time-to-time the Company issues time-based restricted stock and stock unit awards.

The following summarizes the activity in the time-based restricted stock and stock unit awards under the 2014 Plan during the fiscal year ended January 3, 2026:

Restricted Stock

And Unit Stock

Grant Date Fair

12 unchanged sentences

( 23,000 ) $ 7.38

Outstanding non-vested at December 28, 2024

Outstanding non-vested at January 3, 2026

179,037 $ 13.52

Based on the closing price of the Company’s common stock of $ 23.17 per share on December 27, 2024 ( the last trading day prior to December 28, 2024), the intrinsic value of the time-based non-vested restricted stock awards at December 28, 2024 was approximately $ 6.7 million.

As of December 28, 2024, there was approximately $ 2.6 million of total unrecognized compensation cost related to time-based restricted stock awards, which is expected to be recognized over the average weighted remaining vesting period of the restricted stock awards through fiscal 2029.

Share-based compensation for time-based equity was $ 1.2 million and $ 1.3 million for the fiscal years ended January 3, 2026 and December 28, 2024, respectively.

Based on the closing price of the Company’s common stock of $ 19.86 per share on January 2, 2026 ( the last trading day prior to January 3, 2026), the intrinsic value of the time-based non-vested restricted stock and stock unit awards at January 3, 2026 was approximately $ 3.6 million.

As of January 3, 2026, there was approximately $ 2.0 million of total unrecognized compensation cost related to time-based restricted stock and stock unit awards, which is expected to be recognized over the average weighted remaining vesting period of the restricted stock and stock unit awards through fiscal 2035.

RCM TECHNOLOGIES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands, except share and per share amounts, unless otherwise indicated)

Fiscal Years Ended January 3, 2026 and December 28, 2024

(In thousands, except share and per share amounts)

SHARE BASED COMPENSATION (CONTINUED)

Performance-Based Restricted Stock Awards

From time-to-time the Company issues performance-based restricted stock awards to its employees.

Performance-based restricted stock awards are typically vested based on certain multi-year performance metrics as determined by the Board of Directors Compensation Committee.

The following summarizes the activity in the performance-based restricted stock awards during the fiscal year ended December 28, 2024:

Performance-Based Restricted Stock and Stock Unit Awards

From time-to-time the Company issues performance-based restricted stock and stock unit awards to its employees.

Performance-based restricted stock and stock unit awards are typically vested based on certain multi-year performance metrics as determined by the Board of Directors Compensation Committee.

The following summarizes the activity in the performance-based restricted stock and stock unit awards during the fiscal year ended January 3, 2026:

and Stock Unit

Grant Date Fair

3 unchanged sentences

300,000 $ 28.79

( 62,500 ) $ 11.96

Forfeited or expired

( 37,500 ) $ 11.96

Outstanding non-vested at December 28, 2024

4 unchanged sentences

( 55,106 ) $ 26.73

Outstanding non-vested at December 28, 2024

Outstanding non-vested at January 3, 2026

282,157 $ 24.69

1 unchanged sentence

The Company will then recognize the appropriate expense cumulatively in the year performance becomes probable and recognize the remaining compensation cost over the remaining requisite service period.

If at a later measurement date, the Company determines that performance-based restricted stock awards deemed as likely to vest are deemed as unlikely to vest, the expense recognized will be reversed.

Share-based compensation for performance-based equity agreement was $ 1.6 million and $ 0.7 million for the fiscal years ended December 28, 2024 and December 30, 2023, respectively.

There were no immediately vested share awards during the fiscal year ended December 28, 2024.

During the fiscal year ended December 30, 2023, the Company awarded 4,762 immediately vested share awards at an average price of $ 10.50 .

If at a later measurement date, the Company determines that performance-based restricted stock and stock unit awards deemed as likely to vest are deemed as unlikely to vest, the expense recognized will be reversed.

Share-based compensation for performance-based equity agreement was $ 2.5 million and $ 1.6 million for the fiscal years ended January 3, 2026 and December 28, 2024, respectively.

Based on the closing price of the Company’s common stock of $ 19.86 per share on January 2, 2026 ( the last trading day prior to January 3, 2026), the intrinsic value of all outstanding unvested performance-based equity awards at January 3, 2026 was $ 4.8 million.

RCM TECHNOLOGIES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands, except share and per share amounts, unless otherwise indicated)

Fiscal Years Ended January 3, 2026 and December 28, 2024

(In thousands, except share and per share amounts)

SHARE BASED COMPENSATION (CONTINUED)

and Stock Unit

Weighted Average

7 unchanged sentences

300,000 $ 28.79

( 163,901 ) $ 10.94

Forfeited or expired

9 unchanged sentences

( 78,106 ) $ 21.04

Outstanding non-vested at December 28, 2024

Outstanding non-vested at January 3, 2026

461,194 $ 20.36

Based on the closing price of the Company’s common stock of $ 23.17 per share on December 27, 2024, the intrinsic value of all outstanding unvested equity awards at December 28, 2024 was $ 12.5 million.

Based on the closing price of the Company’s common stock of $ 19.86 per share on January 2, 2026 ( the last trading day prior to January 3, 2026), the intrinsic value of all outstanding unvested equity awards at January 3, 2026 was $ 8.4 million.

TREASURY STOCK TRANSACTIONS

5 unchanged sentences

Such a plan would enable the Company to repurchase its shares during periods outside of its normal trading windows when the Company typically would not be active in the market.

On April 24, 2023, the Company agreed to repurchase, in a private transaction approved by the Board, 333,686 shares of common stock at a per-share price of $ 11.91 per share.

During the fiscal year ended December 28, 2024, the Company purchased 407,653 shares at an average price of $ 19.08 per share.

During the fiscal year ended January 3, 2026, the Company purchased 416,582 shares at an average price of $ 17.61 per share.

During the fiscal year ended December 28, 2024, the Company purchased 407,653 shares at an average price of $ 19.08 per share.

As of December 28, 2024, the Company has $ 42.2 million available for future treasury stock purchases.

The Company accrued $ 25 in excise tax associated with its Treasury Stock Repurchase Plan during the fiscal year ended December 28, 2024.

Excise tax is recorded directly to additional paid-in capital.

As of January 3, 2026, the Company has $ 34.9 million available for future treasury stock purchases.

The Company accrued $ 29 in excise tax associated with its Treasury Stock Repurchase Plan during the fiscal year ended January 3, 2026.

Excise tax is recorded directly to treasury stock.

RCM TECHNOLOGIES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands, except share and per share amounts, unless otherwise indicated)

NEW ACCOUNTING STANDARDS

In November 2023, the FASB issued ASU 2023 - 07, Segment Reporting (Topic 280 ):

Improvements to Reportable Segment Disclosures , which is intended to improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses.

The amendments require disclosure of significant segment expenses regularly provided to the chief operating decision maker (CODM) as well as other segment items, extend certain annual disclosures to interim periods, clarify the applicability to single reportable segment entities, permit more than one measure of profit or loss to be reported under certain conditions, and require disclosure of the title and position of the CODM.

We adopted this ASU for the fiscal year ended December 28, 2024.

Fiscal Years Ended January 3, 2026 and December 28, 2024

(In thousands, except share and per share amounts)

New Accounting Standards and Updates

In December 2023, the FASB issued ASU 2023 - 09, Income Taxes (Topic 740 ):

Improvements to Income Tax Disclosures, which requires the annual financial statements to include consistent categories and greater disaggregation of information in the rate reconciliation, and income taxes paid disaggregated by jurisdiction.

ASU 2023 - 09 is effective for the Company’s annual reporting periods beginning after December 15, 2024, with early adoption permitted, and should be applied on a prospective basis, with a retrospective option.

We are currently evaluating the effect that adoption of this ASU will have on our disclosures.

ASU 2023 - 09 was effective for the Company’s annual reporting periods beginning after December 15, 2024, with early adoption permitted, and should be applied on a prospective basis, with a retrospective option.

The Company adopted ASU 2023 - 09, on a prospective basis, for the fifty-three weeks ended January 3, 2026.

In November 2024, the FASB issued ASU 2024 - 03, Disaggregation of Income Statement Expenses (Subtopic 220 - 40 ).

The ASU requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization, within relevant income statement captions.

This ASU also requires disclosure of the total amount of selling expenses along with the definition of selling expenses.

The ASU is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Adoption of this ASU can either be applied prospectively to consolidated financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all periods presented in the consolidated financial statements.

Early adoption is also permitted.

This ASU will likely result in the required additional disclosures being included in our consolidated financial statements, once adopted.

We are currently evaluating the provisions of this ASU.

In July 2025, the FASB issued ASU 2025 - 05, Measurement of Credit Losses for Accounts Receivable and Contract Assets (Financial Instruments – Credit Losses (Topic 326 ) This amendment allows entities to elect a practical expedient that all entities can use when estimating receivable and contract assets arising from transactions accounted for under ASC 606, revenue from contracts with customers.

The amendment adds a practical expedient and an accounting policy election.

The ASU is effective for annual reporting periods beginning after December 15, 2025.

We are currently evaluating the provisions of this ASU.

In August 2025, the FASB issued ASU 2025 - 06, Intangibles -Goodwill and Other – Internal-Use Software (Subtopic 350 - 40 ).

The narrowly drawn changes primarily focus on how companies decide when to count software development costs as an asset (capitalize them).

Under the new guidance, a company can capitalize software costs once two conditions are met:

the company’s leadership has approved and committed to funding the project, and it is likely the project will be finished, and the software will work as intended.

The ASU is effective for annual reporting periods beginning after December 15, 2027.

We are currently evaluating the provisions of this ASU.

In December 2025, the FASB issued ASU No.

2025 - 11, Interim Reporting (Topic 270 ):

Narrow-Scope Improvements.

The ASU clarifies interim disclosure requirements and the applicability of Topic 270.

The objective of the amendments is to provide further clarity about the current interim disclosure requirements.

The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027.

Adoption of this ASU can be applied on either a prospective or a retrospective approach.

Early adoption is permitted.

We are currently evaluating the provisions of this ASU.

In December 2025, the FASB issued ASU No.

2025 - 12, Codification Improvements.

The ASU addresses thirty-three items, representing the changes to the Codification that ( 1 ) clarify, ( 2 ) correct errors, or ( 3 ) make minor improvements.

Generally, the amendments in this Update are not intended to result in significant changes for most entities.

The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2026.

The adoption method of this ASU may vary, on an issue-by-issue basis.

Early adoption is permitted.

We are currently evaluating the provisions of this ASU.

RCM TECHNOLOGIES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands, except share and per share amounts, unless otherwise indicated)

Fiscal Years Ended January 3, 2026 and December 28, 2024

(In thousands, except share and per share amounts)

SEGMENT INFORMATION

4 unchanged sentences

The tables below summarize the results of operations and total assets by segment provided to the CODMs.

Segment operating income (loss) includes selling, general, and administrative expenses directly attributable to that segment and charges for allocating corporate costs to each of the operating segments.

Please refer to the segment discussion on pages 34 and 35 of the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of this Annual Report on Form 10 -K.

In the second quarter of fiscal 2025, the Company made certain revisions to the internal measurement of segment operating results for the purpose of evaluating segment performance and resource allocation.

The revised segment reporting now presents corporate operating costs separately instead of allocating them to the operating segments.

The revision was the result of a shift in the CODM’s more granular and independent focus on the now four segments.

We have presented the revised segment results for both fiscal 2025 and the prior period on a comparable basis.

The following tables summarize the results of operations and total assets by segment provided to the CODMs.

Segment operating income (loss) includes selling, general, and administrative expenses directly attributable to that segment.

The following tables reflect the results of the reportable segments consistent with the Company’s management system.

Please refer to the segment discussion of the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of this Annual Report on Form 10 -K.

Fiscal Year Ended

December 28, 2024

January 3, 2026

Life Sciences,

5 unchanged sentences

24,220 11,976 6,694 18,042 60,932

Depreciation and amortization of

property and equipment

525 706 188 - 1,419

Amortization of acquired intangible assets

- - 683 - 683

Potential stock issuance and financing

- - - 323 323

Remeasurement of contingent consideration

Depreciation and amortization of property and equipment

393 771 148 606 1,918

Operating income

Operating income (loss)

$ 22,789 $ 14,635 $ 6,317 $ ( 18,648 ) $ 25,093

Total assets as of December 28, 2024

Total assets as of January 3, 2026

$ 46,541 $ 60,562 $ 13,936 $ 13,358 $ 134,397

4 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands, except share and per share amounts, unless otherwise indicated)

Fiscal Years Ended January 3, 2026 and December 28, 2024

(In thousands, except share and per share amounts)

SEGMENT INFORMATION (CONTINUED)

8 unchanged sentences

22,213 11,869 6,875 15,830 56,787

Depreciation and amortization of

property and equipment

Depreciation and amortization of property and equipment

386 613 150 270 1,419

1 unchanged sentence

- - 683 - 683

Gain on sale of assets

Potential stock issuance and financing transactions

- - - 323 323

Remeasurement of contingent consideration

- - ( 1,759 ) - ( 1,759 )

Operating income (loss)

8 unchanged sentences

The Company does not derive any revenue in the Philippines.

Revenue by geographic area for the fiscal years ended December 28, 2024 and December 30, 2023 are as follows:

Revenue by geographic area for the fiscal years ended January 3, 2026 and December 28, 2024 are as follows:

Fiscal Year Ended

5 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands, except share and per share amounts, unless otherwise indicated)

Fiscal Years Ended January 3, 2026 and December 28, 2024

(In thousands, except share and per share amounts)

SEGMENT INFORMATION (CONTINUED)

4 unchanged sentences

$ 134,397 $ 132,077

Generally, the Company’s relative income or loss generated in each of its jurisdictions can materially impact the consolidated effective income tax rate of the Company, particularly the ratio of Canadian and Serbian pretax income, versus United States pretax income.

The consolidated effective income tax rate for fiscal years ended December 28, 2024 and December 30, 2023 were 34.0 % and 24.2 %, respectively.

The Company’s United States Federal statutory tax rate for fiscal years ended December 28, 2024 and December 30, 2023, before any adjustments, was 21.0 %.

The income tax provisions reconciled to the tax computed at the United States Federal statutory rate for fiscal years 2024 and 2023 are as follows:

% of Earnings

Tax expense on taxable

income at federal statutory rate

$ 4,240 21.0 $ 4,661 21.0

State and Puerto Rico income taxes,

net of Federal income tax benefit

1,164 5.8 1,082 4.9

Permanent differences domestic and foreign

The components of earnings before income taxes by United States and foreign jurisdictions were as follows:

Fiscal Years Ended

United States

$ 17,192 $ 16,607

Intangible asset deferred liability true-up 797 4.0 - -

Foreign income tax rates

Foreign jurisdictions

$ 22,072 $ 20,190

Foreign tax adjustment 174 0.9 - -

The components of income tax expense (benefit) are as follows:

Fiscal Years Ended

$ 1,619 $ 2,609

Total income tax expense

State and local

$ 5,738 $ 6,863

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands, except share and per share amounts, unless otherwise indicated)

Fiscal Years Ended January 3, 2026 and December 28, 2024

(In thousands, except share and per share amounts)

INCOME TAXES (CONTINUED)

The components of income tax expense (benefit) are as follows:

Fiscal Years Ended

$ 2,609 $ 3,055

State and local

( 253 ) ( 33 )

$ 6,863 $ 5,364

The components of earnings before income taxes by United States and foreign jurisdictions were as follows:

Fiscal Years Ended

United States and Puerto Rico

Generally, the Company’s relative income or loss generated in each of its jurisdictions can materially impact the consolidated effective income tax rate of the Company, particularly the ratio of Canadian, German and Serbian pretax income, versus United States pretax income.

The consolidated effective income tax rate for the fiscal years ended January 3, 2026 and December 28, 2024 were 26.0 % and 34.0 %, respectively.

The Company’s United States Federal statutory tax rate for the fiscal years ended January 3, 2026 and December 28, 2024, before any adjustments, was 21.0 %.

The following is a reconciliation of the statutory federal income tax rate to the Company’s effective tax rate for the fifty-three weeks ended January 3, 2026, updated for the new guidelines within ASU 2023 - 09, which the Company adopted prospectively:

Tax expense on taxable income at federal statutory rate

State income taxes, net of federal benefit

Permanent differences, domestic

Section 162(m) disallowance

Other Permanent differences, domestic

Foreign income taxes

Changes in unrecognized tax benefit

( 1,196 ) ( 5.4 )

Foreign jurisdictions

( 307 ) ( 1.4 )

A reconciliation of the unrecognized tax benefits for the years December 28, 2024 and December 30, 2023:

Unrecognized Tax Benefits

Balance as of December 31, 2022

Gross increases:

tax positions in prior period

Gross increases:

tax positions in current period

Balance as of December 30, 2023

Gross increases:

tax positions in prior period

Gross increases:

tax positions in current period

Balance as of December 28, 2024

Total income tax expense

The following is a reconciliation of the statutory federal income tax rate to the Company’s effective tax rate for the fifty-two weeks ended December 28, 2024, prior to application of ASU 2023 - 09:

Tax expense on taxable income at federal statutory rate

State income taxes, net of Federal income tax benefit

Permanent differences, domestic and foreign

Intangible asset deferred liability true-up

Foreign income tax rates

Foreign tax adjustment

Changes in unrecognized tax benefit

Total income tax expense

RCM TECHNOLOGIES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands, except share and per share amounts, unless otherwise indicated)

Fiscal Years Ended January 3, 2026 and December 28, 2024

(In thousands, except share and per share amounts)

INCOME TAXES (CONTINUED)

The total amount of unrecognized tax benefits relating to the Company’s tax positions is subject to change based on future events including, but not limited to, the settlements of ongoing audits and/or the expiration of applicable statutes of limitations.

Although the outcomes and timing of such events are highly uncertain, it is reasonably possible that the balance of gross unrecognized tax benefits will not change during the next 12 months.

However, changes in the occurrence, expected outcomes and timing of those events could cause the Company’s current estimate to change materially in the future.

The Company accounts for penalties or interest related to uncertain tax positions as part of its provision for income taxes and records such amounts to tax expense.

The Company recorded no expense for penalties or interest in the fiscal years ended December 28, 2024 and December 30, 2023.

At December 28, 2024 and December 30, 2023, deferred tax assets and liabilities consist of the following:

At January 3, 2026 and December 28, 2024, deferred tax assets and liabilities consist of the following:

Deferred tax assets:

3 unchanged sentences

Lease liability

Net operating loss carryforward, Germany

Foreign deferred tax asset 6 120

Total deferred tax assets

8 unchanged sentences

( 1,127 ) ( 1,244 )

Deferred tax liability, net, Canada

Total deferred tax liabilities

( 8,182 ) ( 7,568 )

Total deferred tax (liabilities) assets, net

Total deferred tax liabilities, net

$ ( 5,667 ) $ ( 4,406 )

The Company has gross state net operating losses of $ 0.6 million and foreign net operating losses of $ 0.4 million to be applied to the net income of future tax returns, respectively.

The components of cash paid for income taxes, net of refunds, in United States and foreign jurisdictions for the fifty-three weeks ended January 3, 2026 were as follows:

New York City

Other states (1)

Other foreign jurisdictions

New York and California made up the majority of the tax effect in this category.

A reconciliation of the unrecognized tax benefits for the fiscal years ended January 3, 2026 and December 28, 2024:

Unrecognized Tax Benefits

Balance as of December 30, 2023

Gross increases:

tax positions in prior period

Gross increases:

tax positions in current period

Balance as of December 28, 2024

Gross increases:

tax positions in prior period

Gross increases:

tax positions in current period

Balance as of January 3, 2026

RCM TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended January 3, 2026 and December 28, 2024

(In thousands, except share and per share amounts)

INCOME TAXES (CONTINUED)

The Company accounts for penalties or interest related to uncertain tax positions as part of its provision for income taxes and records such amounts to tax expense.

The Company recorded minimal expense for penalties or interest in the fiscal years ended January 3, 2026 and December 28, 2024.

The Company has gross state net operating losses of $ 0.2 million to the net income of future tax returns.

The state net operating losses are subject to various expiration periods.

The foreign net operating losses have an indefinite carryforward period.

The Company conducts its operations in multiple tax jurisdictions in the United States, Canada, Germany, Philippines, Puerto Rico and Serbia.

The Company and its subsidiaries file a consolidated United States Federal income tax return and file in various states.

The Company has no open Federal audits as of December 28, 2024.

The Company has no open Federal audits as of January 3, 2026.

Except for limited exceptions, the Company is no longer subject to audits by state and local tax authorities for tax years prior to 2021.

The Company is no longer subject to audit in Canada for the tax years prior to tax year 2021.

The Company is under audit in Canada for tax years 2021 and 2022.

The Company is no longer subject to audit in Puerto Rico for the tax years prior to tax year 2020.

Differences between the effective tax rate and the applicable U.S.

federal statutory rate may arise, primarily from the effect of state and local income taxes, and share-based compensation.

The actual 2024 effective tax rate may vary from the estimate depending on the actual operating income earned in various jurisdictions, and the exercise of stock options and vesting of share-based awards.

RCM TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands, except share and per share amounts, unless otherwise indicated)

INCOME TAXES (CONTINUED)

Under APB 23, foreign earnings are generally not subject to U.S.

tax until repatriated or deemed repatriated under the anti-deferral rules.

The Company has determined that as of December 28, 2024, all current and future earnings in its foreign subsidiaries will be permanently reinvested.

The Company has determined that as of January 3, 2026, all current and future earnings in its foreign subsidiaries will be permanently reinvested.

Based on this determination, the anti-deferral rules have no material impact on the Company.

4 unchanged sentences

Depending upon the particular facts and circumstances, the Company may also be subject to indemnification obligations under its contracts with such clients relating to these matters.

Any pending legal proceedings and claims that arise from time to time in the ordinary course of its business may not be covered by insurance.

As such, the Company is required to assess the likelihood of any adverse outcomes to these matters as well as potential ranges of losses and possible recoveries.

7 unchanged sentences

The Company could increase or decrease its earnings in the period that the changes are made.

The Company is exposed to various asserted claims as of December 28, 2024, where the Company believes it has a probability of loss.

The Company is exposed to various asserted claims as of January 3, 2026, where the Company believes it has a probability of loss.

Additionally, the Company is exposed to other asserted claims whereby an amount of loss has not been declared, and the Company cannot determine the potential loss.

1 unchanged sentence

However, the Company believes that such matters will not, either individually or in the aggregate, have a material adverse effect on its business, consolidated financial position, results of operations, or cash flows.

As of December 28, 2024, the Company has accrued $ 2.8 million for asserted claims.

In April 2022, a client of the Company’s Engineering segment alleged that a system partially designed by the Company is not operating as intended and that the Company is responsible.

The Company has not determined if it has any liability.

In the event of liability, the Company believes its damages are contractually limited to an amount no higher than $ 3.3 million.

Furthermore, the Company believes that if it were found liable, any damages would be covered by insurance, subject to a deductible of $ 0.5 million and maximum coverage of $ 5.0 million.

While the clients estimated damages are not known, the client has either inferred or asserted during settlement discussions that it’s damages significantly exceed the Company’s insurance coverage of $ 5 million.

While the Company attempts to find a mutually agreeable solution, the Company has reserved $ 0.5 million for this project.

The Company can give no assurance that its liability is limited to $3.3 million or that liability over $0.5 million, if any, will be covered by insurance.

As of January 3, 2026, the Company has accrued $ 0.3 million for asserted claims.

RCM TECHNOLOGIES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands, except share and per share amounts, unless otherwise indicated)

CONTINGENCIES (CONTINUED)

The Company is also subject to other pending legal proceedings and claims that arise from time to time in the ordinary course of its business, which may not be covered by insurance.

Fiscal Years Ended January 3, 2026 and December 28, 2024

(In thousands, except share and per share amounts)

RETIREMENT PLANS

Profit Sharing Plans

The Company maintains a 401 (k) profit sharing plan for the benefit of eligible employees in the United States and other similar plans in Canada, Philippines, Puerto Rico and Serbia (the “Retirement Plans”).

1 unchanged sentence

The Company, at the discretion of the Board of Directors, may make contributions of cash to match deferrals of compensation by participants in the Retirement Plans.

Contributions to the Retirement Plans charged to operations by the Company for the fiscal years ended December 28, 2024 and December 30, 2023 were $ 460 and $ 698 , respectively.

Contributions to the Retirement Plans charged to operations by the Company for the fiscal years ended January 3, 2026 and December 28, 2024 were $ 384 and $ 460 , respectively.

Leases are recorded in accordance with FASB ASC 842, Leases which requires lessees to recognize a right of use (“ROU”) asset and an operating right of use liability for all leases with terms greater than 12 months and requires disclosures by lessees and lessors about the amount, timing and uncertainty of cash flows arising from leases.

8 unchanged sentences

The Company has elected to account for these as a single lease component with the exception of its real estate leases.

RCM TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands, except share and per share amounts, unless otherwise indicated)

COMMITMENTS (CONTINUED)

Leases (Continued)

The components of lease expense were as follows:

1 unchanged sentence

Operating lease cost

$ 1,356 $ 1,428

Finance lease cost

2 unchanged sentences

Total finance lease cost

RCM TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended January 3, 2026 and December 28, 2024

(In thousands, except share and per share amounts)

LEASES (CONTINUED)

Supplemental Cash Flow information related to leases was as follows:

Cash paid for amounts included in the measurement

of lease liabilities

Cash paid for amounts included in the measurement of lease liabilities

Operating cash flows from operating leases

4 unchanged sentences

Operating leases

$ 745 $ 3,407

Finance leases

RCM TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands, except share and per share amounts, unless otherwise indicated)

COMMITMENTS (CONTINUED)

Leases (Continued)

Supplemental Balance Sheet information as of December 28, 2024 and December 30, 2023 related to leases was as follows:

$ 222 $ 2,172

Supplemental Balance Sheet information as of January 3, 2026 and December 28, 2024 related to leases was as follows:

Operating leases

17 unchanged sentences

Finance lease liability - non-current

( 380 ) ( 1,112 )

Total finance lease liabilities

11 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended December 28, 2024 and December 30, 2023

(Dollars in thousands, except share and per share amounts, unless otherwise indicated)

COMMITMENTS (CONTINUED)

Fiscal Years Ended January 3, 2026 and December 28, 2024

(In thousands, except share and per share amounts)

LEASES (CONTINUED)

Maturities of lease liabilities are as follows:

$ 1,447 $ 886

Total lease payments

2 unchanged sentences

$ 5,022 $ 1,223

RELATED PARTY TRANSACTIONS

There have been no related party transactions during the periods presented.

SUBSEQUENT EVENTS

For the period subsequent to January 3, 2026 and through April 2, 2026, the Company purchased 348,366 shares of the Company’s common stock as part of its Treasury Stock Repurchase Program, at an average price of $ 19.03 , totaling $ 6.6 million.

As of April 2, 2026, the Company has up to $ 28.3 million available for future treasury stock purchases.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures